Ever feel like you’re navigating tax law in the dark—as a self-employed professional, juggling health coverage options and wondering which premiums are deductible and how? You’re not alone. The good news? There’s a legal, powerful way to ease the burden: the self-employed health insurance deduction. Today, I’ll walk you through how this works for Medicare Part B, COBRA, and Marketplace premiums, all while keeping things clear, approachable, and (dare I say) enjoyable to read.

Why this matters (and sounds too good to be true)

If you’re self-employed and paying for your own health insurance, the thought of deducting Medicare Part B or COBRA premiums may feel like finding buried treasure. And the IRS did, in fact, make that treasure legally accessible under specific rules. The trick is knowing the how and when—and you’re about to!

1. The Self-Employed Health Insurance Deduction: Your New Best Friend

What is it?

At its core, the self-employed health insurance deduction allows you to deduct premiums you pay for qualifying health insurance directly from your gross income, effectively lowering your Adjusted Gross Income (AGI). This is an above-the-line deduction—meaning you don’t have to itemize to claim it, and it reduces AGI right off the bat.(TurboTax, H&R Block Tax preparation company)

What counts?

• Medicare premiums (Parts A, B, C, D, Medigap)—even those for your spouse or dependents—are included.
• COBRA premiums qualify too, so long as you’re truly self-employed and not eligible for a subsidized employer plan.
• Marketplace (ACA) insurance also qualifies—election of COBRA eligibility doesn’t disqualify you.(Claimyr)

To formally calculate and claim it, you’ll use IRS Form 7206 and report the deduction on Schedule 1 (Form 1040), line 17.(IRS)

2. Quick Comparison: Which Premium Is What?

3. The “Shocking” Part: Why This Stands Out

• Many retirees presume that Medicare premiums are not deductible unless medical expenses exceed 7.5% of AGI. That’s true—but it applies only if you’re not self-employed.(Accounting Insights, Investopedia)
• But, if you’re self-employed, you can deduct those same premiums without hitting the 7.5% threshold—legally and dramatically reducing your taxable income!
• Better still, the deduction:
  • Lowers AGI, making you more likely to qualify for other credits.
  • Requires no itemizing, keeping your filing process simple and clean.

4. How to Maximize These Deductions: Step-by-Step Guide

1. Ensure eligibility:
   • Must be self-employed with net income (Schedule C or F, or equivalent).(IRS)
   • No access to employer-subsidized coverage for weeks/months you claim.
2. Choose your plan wisely:
   • Medicare? COBRA? Marketplace? Pick what fits your health and budget—but all can qualify if you’re eligible.
3. Pay premiums in your name or business’s:
   • Medicare and ACA in your name; COBRA counts as long as it’s not employer-subsidized.
4. Track coverage per month:
   • Deduction applies month-by-month. If you had employer coverage in January, you can only deduct months when you had none.(TurboTax, H&R Block Tax preparation company)
5. Fill out IRS Form 7206:
   • Helps calculate exact amount, then move it to Schedule 1.(IRS)
6. Keep records:
   • Save receipts, premium statements, Medicare bills—all needed for audit protection.

5. Real-Talk Q&A: Clearing Up Confusion

“What if I had a job until April, then went self-employed?”
You deduct only April–December premiums—corresponding to months you lacked employer coverage.(Claimyr, TurboTax)

“Does COBRA eligibility disqualify me?”
Nope—COBRA eligibility isn’t seen as having employer-subsidized coverage, because you’re paying full cost plus an admin fee.(Claimyr)

“How much can I deduct?”
Up to your net self-employment income. If your business shows a loss, the deduction is limited to zero.

“Can I deduct my spouse’s Medicare?”
Yes! All relevant Medicare premiums for spouse, dependents, and children under 27 qualify.

6. Why This Strategy Makes Sense (Beyond Tax Savings)

• Lower AGI gives you breathing room for other credits: Earned Income Tax Credit, student loan deductions, retirement contributions.
• Avoids itemizing complexities: You don’t need total deductions exceeding a high standard deduction threshold.
• Simplifies compliance: One deduction, one form (7206), and clarity—no convoluted math across multiple schedules.

7. Final Thoughts: Do This—but Be Smart

Yes, the ability to deduct Medicare Part B, COBRA, or Marketplace premiums as a self-employed person is legal, impactful, and relatively straightforward. Yet, it hinges on staying within IRS rules:

• Only include months without employer-subsidized coverage.
• Don’t attempt to deduct more than your self-employment income.
• Keep precise documentation.

When handled right, this deduction not only shocks your bottom line—in a good way—but also equips you with a powerful tax advantage that countless self-employed professionals overlook.

Further Reading (embedded naturally):

• Dive deeper into Self-Employed Health Insurance Deduction with Intuit’s user-friendly explanation and breakdown of eligibility rules.(TurboTax)
• Explore a clear comparison between COBRA and Marketplace plans under the deduction rules—with insights on how COBRA eligibility doesn’t disqualify you.(Claimyr)

TL;DR:

• You can deduct Medicare Part B, COBRA, and Marketplace premiums if you’re self-employed and not eligible for subsidized employer coverage.
• Use Form 7206 → Schedule 1 (line 17, Form 1040) to apply the deduction.
• It reduces your AGI immediately, putting more money back in your pocket—legally, effectively, and smartly.

Stay empowered, informed, and ready to take control of your self-employed tax journey.